‘The Shape of Convenience® 2012:The Shape of Convenience® 2012:the winning strategies for the next 3 years’
Scott F Annansrcg
© srcg 2009
Change is?
I d t i fit bilitIn order to improve my profitability,I will provide my customers with …?
© srcg 2009
Are we ‘fit for purpose’?
• Is refuelling a ‘distressed purchase’ or a ‘destination purchase’?destination purchase ?
• Are we satisfying customers’ frequent & d d kl limmediate needs quickly & easily?
• Are our retail positioning and customer • Are our retail positioning and customer proposition clear?
• Are we balancing needs:
Strategy SuppliersStrategy Suppliers
© srcg 2009
Store volume increases
20% with a new designdevelopmentdevelopment
© srcg 2009
Store volume increases
< 150% with offer developmentdevelopment
20% with a newdesign development
© srcg 2009
The Convenience market
UK size and growth USA size and growth +4% CAGR
+5% CAGR+6% YOY
+8% YOY
5% CAGR
Source: srcg Shape of Convenience, IGD, NACS, RNCOS India
© srcg 2009© srcg 2009
UK Convenience ‘the bigger market’
UK size and growthUK size and growth
+6% CAGR
+4% CAGR
Source: srcg Shape of Convenience, IGD, NACS, RNCOS India
© srcg 2009© srcg 2009
UK & I changed over 5 years … at speed!
Customer offerHigh
Fresh & ‘shopping missions’ lead
Tobacco, snacking, fuel, and top-up lead
Low
© srcg 2009
1990 2008
Big box ‘use of data’ the catalyst
Convenience basketHigh
Low
© srcg 2009
1990 2002 200820011995 2003
Driving change
1. Shopper Behaviour
2. Consumer Needs
3. Government4. Competitive 3. Government Legislation
4. Competitive Environment
© srcg 2009
The last 12 months … pick your growth
High
Low
© srcg 2009
2008 2009½
f. Source of profit 2012
nity
Store
port
un
Fuel Store
Store
Store profits
Op Fuel
Fuel
Franchise fees
Tobacco fees
2005 2012
Capex reduction
© srcg 2009© srcg 2008
2005 2012Source: Shape of Convenience® 2009
f. Source of profits 2012
Today’s assortment
Today’s assortmentni
ty
assortment assortment
Fresh & Healthyport
un
y
Op
Fresh & Healthy
2005 2012
© srcg 2009© srcg 2008
2005 2012
Source: Shape of Convenience® 2009
1. Winning strategies … a clear strategy!
Shoppers’ missions
High
Shoppers missions 2012
ct d
Multi route to market
Company owned & operatedPr
otec
Lead
operated
Products2005
© srcg 2009© srcg 2008 Low
Products
Global oil retail strategyGlobal oil retail strategy
Market sophistication/ h d Litres /site/ shopper needsHigh
Alliances
Insert
Franchise
Insert
Controlled backcourt
Disconnect Fuels tie-in
Fuels Total siteLow
© srcg 2009© srcg 2008Source: Shape of Convenience® 2009
Revenue opportunity
2. Satisfying customer needs: the big 4
Impact StoreImpact Store CategoryCategoryImpact StoreConcept
Impact StoreConcept
CategoryManagement
CategoryManagement
Efficient Efficient State-of-the Art State-of-the Art Efficient
DistributionEfficient
Distributionthe-Art
IT Systemthe-Art
IT System
© srcg 2009
Project Impact Project Impact
Traditionalconvenience
stored t
FoodserviceOil products
MultiMulti--service offeringservice offeringproducts
p
FinancialOther products
IMPACTIMPACTConcepts Concepts
productsp
and services
Customerservice
Co-brandingservice
Proprietarybrands
g
Price Optimization strategies
Micro-marketmerchandising
product mix
Creativepromotionalcampaigns
Store designStore design
3. Data is the weapon of choice
© srcg 2009
Copyright © 2009 Tesco.com
At heart of Tesco’s success
Products ServicesChannels
Rewarding loyalty
© srcg 2009
Copyright © 2009 Tesco.com
4. Financial services
“Tesco Personal Finance could deliver £1 billion inprofits per annum, more than double the present levelof just under £400 million a year …services are a biggerand faster-growing markets than food … consumersand faster growing markets than food … consumerslook to make every pound work harder … it is a goodTime for Tesco to expand its presence”. Sir Terry Leahy, 2008
© srcg 2009
5. Clear customer positioning
+
© srcg 2009
Clear retail proposition
© srcg 2009
Clear retail proposition
ResultsSales + 150%Sa es 50%Basket size + 70%Transactions + 50%Transactions + 50%Brands ‘halo’ growth + 22% F l l + 5%Fuel volumes + 5%
© srcg 2009
6. Doing the basics ‘A little better’
© srcg 2009
Tobacco … invest in behaviour change
© srcg 2009© srcg 2008Source: Shape of Convenience® 2009, client programs
Retailer incursions
© srcg 2009
Integrated enablers
They rebalance efficiency, investment and effective market responsemarket response
I t t d S l Ch i
Insight
Integrated Supply Chain Formats
Suppliers Buying Logistics RetailNetwork
Category Management
© srcg 2009
The retail engine
DriversTotal # of Shopping
Trips
% transactionscontaining
the Category
TransactionSize (# items x
$ value per item)
Store SalesValue
%Gross Margin
ActualProfitX X = X =
Total StoreStrategies
TrafficBuild
Basket Size
Basket Profit
T ti C tN TransactionBuildCategory
Strategies
Conversion%
CategoryProfit
New products &
services
• Hi Penetration• Hi Frequency• Hi impact –
reset• Day-part
• Larger sizes• Product affinity• Complementary
add-ons
ProductTactics
Low volumeLow frequency
products
• Convenience• Loyalty
• Low price sensitivity
Space rentalSupplier fees
© srcg 2009© srcg 2008
Business value
Key Focus Areas Value LeversCUSTOMERS
Convenience
• Macro range & space• Price optimization• On-shelf availability• Basket size
SalesCustomer loyalty
• Customer insight• Customer retention• Up-selling
• Promotions
Operating
Customer traffic • Customer retention• Up-selling• Advertising
• Cost of Goods SoldBusiness Operating Cost
Lean Retailing Cost of Goods Sold• Site operating costs• Markdowns• Wastage
Business value
Customer
Better associates
Tailored offering
• Customer Service• Micro range & space • Store Clustering• Store layout/adjacencies
© srcg 2009© srcg 2008
CustomerExperience Optimized in-stocks
• Store layout/adjacencies
One store 0% to 150%es
Delivery Offer Communication
% s
ale
Sitesignage
Famous For
A%
Disciplines Tailored solutions
Pricing Area Marketing
Macro space
Offer
StoreA t
Adjacencies
p
StoreDesign
Assets
In-Storetraining
Enforcer
© srcg 2009 Components
Enforcer
The winning strategy
‘Develop a distinctive & shopper-centric solution/s that drivesDevelop a distinctive & shopper centric solution/s that drives a competitive advantage within your market and provides a
blueprint for the future’
Market Shopper/Consumer Brand
s
An offer that is distinctivein the local market and provides clear points of
Exceed the needs of target consumers and
change shopping
A distinctive look and feel that is aligned to the brand and which gi
c Pi
llars
difference over key competitors
behaviour resonates with shoppers
Stra
teg
Financial vision
The rollout of winning concepts to drive increased sales, profit M² & customer loyalty to all stores
© srcg 2009
p o t & custo e oya ty to a sto es
srcg Small stores & fuels’20 years’ heritage
Global knowledgeof best in class retailingProducts of best in class retailing
Retail strategy Category managementFormat developmentFresh development
Retailer expertise
Fresh developmentConversion
Data marketingVisioning
Retailer expertise
© srcg 2009
Scott F Annan+ 44 7774 696142+ 44 7774 696142www.srcg.com
© srcg 2005
Important Copyright Notice
This presentation has been developed for
C-store Connections UK & I 2009
June 17, 2009 and is the property of srcg Ltd
Duplication, distribution or use of this material in any form is strictly prohibited without prior written consent of srcg Ltd.
This information contained herein is confidential and must not be used without prior written consent. Data used within this presentation is
indicative and should not be used in any business literature.
© srcg 2005